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Malaysian Industrial Relations at century’s turn: Vision 2020 or a specter of the past

Malaysian Industrial Relations at century’s turn: Vision 2020 or a specter of the past
Malaysian Industrial Relations at century’s turn: Vision 2020 or a specter of the past

Malaysian industrial (IR) relations have been characterized by a number of State controls that ensure a high level of administrative power within the workplace, minimal conflict and very little negotiation power for workers. These programs have been an important part of the package to attract investors as the Malaysian business strategy focuses on less expensive industries, which are aimed at exporting. Since then, however, Malaysia has embraced the goal of a developed country by 2020 and embarked on a strategy to add value, a powerful industrial strategy. This paper analyzes the current Malsiansian IR at the job level asking the question of whether the economic progress towards ‘Vision 2020’ is in line with Malaysia’s IR transformation. It will be seen that there is evidence of significant growth in training, the implementation of more skills in other workplaces and the remote conditions of certain ‘small production’ practices. Basic change is not possible, workers are left out of the decision-making process inside and outside the workplace.


Industrial relations in Malaysia (IR) have been characterized by several State controls that ensure a high level of internal control, very little conflict and very little labor negotiation (Jomo and Todd 1994; Arudsothy and Littler 1993; Ariffin 1997). These programs have been an important part of the package to attract investors as the Malaysian business strategy focuses on less expensive, exporting industries. Since then, however, Malaysia has embraced the goal of a developed country by 2020 and embarked on a strategy to add value, a powerful industrial strategy. Could this be expected to lead to both changes in production mode and IR / HR policies and practices? Increased productivity one would expect to see some movement from mass production and the corresponding ‘Old IR’ (low-skilled workers ’jobs assigned to one job, moderate management decisions, and limited investment in work life and safety and training) in a‘ flexible ’production model and and the corresponding ‘New IR’ (employee participation in decision-making, multi-skilled workers are grouped into independent work teams, the provision of continuous targeted training, co-operative commitment between managers and employees reflected in employment security, co-operative relationships and high levels of security) ( Kochan, Katz and McKersie 1986; Appelbaum and Batt 1994; Piore and Sabel 1984; Kitay 1997).

Deo (1995a) researched the issue in Thai workplaces and concluded that in many countries flexible production methods could be introduced, and companies relied heavily on cost-cutting strategies to compete. Companies using flexible production systems did so under a democratic system, their implementation of IR / HR transformation was incomplete and did not bring about significant changes in the level of participation and employee involvement. Deo (1995b) cites this apparent contradiction in what he calls the ‘learning-based industry’ adopted by countries such as Thailand and Malaysia, introducing new innovations elsewhere.

Economic Development

Malaysia’s industrialization has been proceeding at a rapid rate for the past two-three decades with manufacturing’s share of GDP increasing from 12 per cent in 1970 to 36 per cent in 1997. (Malaysia 1976; Ministry of Finance 1998). Industrialization commenced with import substitution before shifting to a low-cost export-oriented industrialization (EOI) approach in the late 1960s and early 1970s. Malaysia changed to a higher value-added EOI technique in the mid 1980s, setting the goal of becoming a developed nation by 2020, thanks to increased productivity and wages.

Malaysia has depended largely on foreign investment to facilitate improved industrial expansion, and as a result, it has become economically reliant on foreign capital, expertise, and access to markets. In 1992, foreign enterprises attributed for 44% of manufacturing additional value and 76% of manufactured exports in the manufacturing sector (Ramstetter 1996, cited in Hill and Athukorala 1998:24). Malaysia’s government is looking to multinational corporations (MNCs) as providers of specialized production strategies and processes, as well as associated management practices, to help the country become more competitive.

Even before the recent financial re, the Malaysian economy was experiencing high growth (an average of 8.7% from 1992 to 1996), low inflation (3.8%), and low unemployment (2.5 per cent in 1996). The Malaysian economy was seriously harmed by a significant devaluation of the ringgit in mid-1997. The subsequent economic recession led to a significant drop in corporate operations and a drop in Gross domestic product ( gdp from 8% in 1997 to –5.0% in 1998. From 2.6 percent in 1997 to 4.9 percent in 1998, unemployment increased ( Ministry of Finance 1998: lxi). It appears that Malaysia has now past the worst of the financial crisis with forecasts suggesting a gradual return to (initially subdued) economic growth.

Industrial Relations

The impact of the union in Malaysia has been overshadowed by laws relating to union recognition, the definition of barriers to negotiations, the liberation struggle and the resolution of disputes. As a result of state intervention, about 42 percent of union members were covered by internal unions in 1992. Conflict between employers and unions in the workplace has escalated and the state has been reluctant to oppose these opponents, leaving workers vulnerable to those employers refusing to accept official applications for union unions. There are many strategies used by employers to prevent the consolidation of their workplaces including permanent delays in union recognition applications, harassment or promotion of shopkeepers, and the formation of company-sponsored unions.

Conditions of unlawful reductions, overtime availability, increased medical leave and property damage are stated by management and union leaders and management agrees that workers will simply resign when they are dissatisfied.


Each employed 1900 to 2500 employees. In all respectable banks, the writing staff and affiliates are represented by the National Union of Bank Employees, Peninsular Malaysia. There was little evidence from our study of consumer eviction cases other than Western Bank to outsource its information technology work. NUBE imposed cost restrictions on the CA which was successful in preventing banks from hiring part-time or full-time employees, so almost all employees had full-time positions.

Bank East Asia has been operating with a lot of skills over the past two years, Western employees have a lot of skills while the other two have not used a lot of jobs. The Western has implemented the most important change in the labor movement by weakening the boundaries between ‘front office’ and ‘back office’ workers. Once again it was the Western Bank that led the way here to increase the independence of clerical staff by increasing their level of authorization to the level previously set by the police, an act called ‘empowerment’ by the Bank and the union. Western has been stretching out groups, most of which may have clergymen as party leaders.

Local Bank and Bank East Asia introduced the idea of ​​the group to their employees but the parties were not performing well. They usually have their own in-house training schools that specialize in, usually modularized, recruitment and continuous staff training. Training in the West was limited internationally across the international team and determined at each level by self-improvement programs.


The Malaysian hotel industry was growing rapidly leading to excessive room building. Due to its market position, the residential population at the Resort Hotel had increased during the recession, but these others had difficulty earning 50 per cent. Despite the small number of IHUs many hotels are covered by an industrial union, the National Union of Hotel, Bar and Restaurant Employees. Management / union relations at both hotels were co-operative.

Managers saw the union as an important role in communicating and lobbying members for changes aimed at management, but at Resort the union restricted certain uses and at Fivestar the union was seen as a barrier to pay and prevented economic downturns. The implementation of management systems that ensure that the service is consistent and increase productivity is not consistent with the Malaysian hotel sector and the mass development phase. At the national level, improvements have been made to working standards in the hotel industry but many areas still need to be improved. Remuneration in the hotel industry, as elsewhere, is largely determined by categories and ownership by salary scales that can be increased annually.

A large portion of staff salaries come from service charges which are also allocated in terms of total but variable and hotel performance.


In one of them, Micro, the parent company is apparently responsible for driving HR / IR policy and other activities in Malaysia. In another, NE, the influence of the parent company is largely in the areas of technology and accounting. In our two other cases, the parent company has had a small impact on HR. In most of our studies the main work organization was Tayloristic – Elecomp and Drive do the same job over and over again even though Drive has given them the opportunity to transfer, after training, to another job more often.

It is only in Micro that the most efficient systems use the production line space relying on manual ingenuity or hard work. In most cases the QCs used, although at Elecomp, were aborted, after the company’s focus shifted from quality to quantity as the key change agent continued. The Malaysian electronics industry is notorious for being a union, a combination of capital requirements and State regulation. It was only in NE that the formal structures were established as an alternative to trade unions and without the security committee these did not deal with the common problems of labor relations.

All four companies relied on general meetings, at lunchtime involving position manager and rank staff and files, or the HR employee himself, to convey employee concerns to management. According to the Malaysian workplace culture, where the right of management is taken away by workers, it is difficult to think of these temporary measures that provide effective inclusion for workers. By comparison Elecomp’s training was largely reserved for managers and managers and was partly driven by the needs of the HRD Fund. The lack of union inclusion is reflected in the high utilization of increased payrolls and corresponding bonuses.

Elecomp reduced its staff by 800 at the beginning of the year on a voluntary basis. The growth of the Micro market meant that it had never dealt with this issue.


If our only question was whether the Malaysian economic development campaign was accompanied by significant changes in IR, the short answer would be ‘No’. The quality of training provided varies with some companies having complex methods – e. There are examples of companies that adopt specific production methods, such as the development of working groups, but this will still appear to be exceptional. The already unchanged IR aspect is a major regulatory and decision-making issue in the workplace.

Some administrative arrangements are blocked by unions. We met with the positive impact of unions on decisions on Quality and NUBE in the banking industry. While the permanent constraints on union activities continue to ensure that unions do not pose a significant challenge to power management, especially in banks they are still in power. There have been recent efforts to involve unions in national decision-making processes through measures such as the National Economic Advisory Committee and various forms of reconciliation in the face of economic poverty and political instability.

On the other hand, most of the country’s policies and restrictions on unions are still in place, as they have been an integral part of the Government’s strategy for attracting investors at a lower cost, which is mainly EOI’s Malaysian industrial sector and to this day, well considered. In this sense, global trade, which is being pushed by the Malaysian government to power, may delay the transition to a new IR. The financial crisis may have been the result of globalization but there has been some Malaysian response to the crisis. There appeared to be, for a time, efforts to engage more unions in negotiating change.

Indeed, management promises a strong moral obligation to prevent retrenchment. High levels of labor were common in the workplace in Malaysia and while profits have declined due to the economic downturn, it can be expected to increase again as the economy picks up.


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